Is MindBeacon (TSX:MBCN) a stock to buy ahead of CloudMD acquisition?

Stocks of MindBeacon Holdings Inc (TSX: MBCN), a Canadian healthcare company focused on mental health, shot up by nearly five per cent on Monday, November 15, trading at a value of C$ 3.39 apiece.

The surge appears to have come after the company announced that it is set to be acquired by leading digital health platform CloudMD Software & Services Inc. (TSXV: DOC).

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Let’s delve into the details of this deal.

CloudMD (TSXV:DOC) - MindBeacon (TSX:MBCN) acquisition – Key insights

The two companies said on Monday that they have signed an agreement that will see CloudMD purchase all of MindBeacon’s common shares for a value of about C$ 116 million.

The transaction, the official statement said, will see a mix of cash and shares, and stand at a total consideration of about C$ 29.5 million in cash and 55.5 million in common shares.

As per the deal, each of MindBeacon’s shares is set to be exchanged for a cash value of C$ 1.22 and 2.285 of a CloudMD share.

The Canadian healthcare players noted that once their merger deal goes through, the combined firm is expected to be one of the “leading fully-integrated health offerings” in North America that can address both mental and physical ailments.

Is MindBeacon (TSXMBCN) a stock to buy ahead of CloudMD acquisition

Their combined network, on the other hand, is expected to see 5,500 corporate clients, while their immediate cost synergies cross C$ 2 million.

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CloudMD is set to become the sole owner of the mental health platform following the closure of the acquisition deal, which includes its cash on hand of C$ 53.9 million as of September 30 this year.

CloudMD & MindBeacon stock performances

Stocks of MindBeacon Holdings have surged by over 20 per cent in the past month and by nearly 24 per cent in the last one week.

This year, however, the mental health services provider’s stock price has declined by about 67 per cent.

CloudMD, too, saw its scrips dip by nearly 40 per cent this year. It has, however, surged by more than three per cent in the past one month and by about seven per cent this week.

Bottomline

With the awareness around mental health being the need of the hour, MindBeacon’s merger with CloudMD could draw in wide interest from investors and clients alike. Also, the assimilation of two well-known Canadian telehealth services providers, in an age where online platforms continue to gain increased traction, could trigger a spike in their demand as well.